Countries around the world measure their prosperity. One of the most common measures, though imperfect, is gross domestic product, or GDP. Besides GDP, there are other measures of economic health, some of which I will discuss in this blog post.
GDP measures the value of the final goods and services produced within a country. That is, GDP is the sum of consumption, investment, government spending and net exports.
Although GDP and its changes are the most popular indicators of a nation’s overall economic output, economists have long recognized that it is an imperfect measure of overall economic well-being. For example, GDP does not account for the production of pollution or consider the health and education of the population and other factors tied to well-being. Because of this, various governments and organizations have started following alternative measurements such as the Human Development Index, Better Life Index and Genuine Progress Indicator. These are some of the most prominent measures that go hand in hand with GDP. For example, Hawaii, Maryland and Vermont have started implementing a Genuine Progress indicator.